DA Davidson cuts Southern California Bancorp shares target amid net interest, loan concerns

On Wednesday, DA Davidson adjusted its outlook on Southern California Bancorp (NASDAQ:BCAL) shares, reducing the price target to $19.50 from the previous $23.00. The firm maintained a Buy rating on the stock despite the revision.

The primary reasons for the price target change are attributed to a forecast of lower net interest income, which is influenced by a reduced net interest margin (NIM) and a projection of slower near-term loan growth for both BCAL and its affiliate, CALB.

The analyst from DA Davidson has also revised the earnings estimates for the years 2024 and 2025. The expected earnings per share (EPS) for 2024 have been lowered from $1.09 to $1.07, and for 2025 from $2.07 to $1.96. These adjustments reflect the anticipated impact of the financial environment on the bank's performance.

The new price target of $19.50 is based on a 10-times multiple applied to the projected 2025 earnings per share and 1.3 times the projected tangible book value (TBV) for the same year. This valuation method takes into account the bank's future earning potential and its net asset value.

Southern California Bancorp's stock price will now be gauged against these updated financial metrics as investors consider DA Davidson's revised expectations. The Buy rating suggests that, despite the lowered price target and earnings estimates, the firm still sees potential value in the stock for investors.

InvestingPro data highlights Southern California Bancorp's (NASDAQ:BCAL) current financial position with a market capitalization of $259.2 million and a P/E ratio of 11.6, which slightly adjusts to 11.26 when looking at the last twelve months as of Q1 2024. The company's price to book ratio stands at a modest 0.89 over the same period. Despite a slight revenue decline of 2.26% over the last twelve months as of Q1 2024, the bank has maintained a strong operating income margin of 36.49%.

Two InvestingPro Tips that could be of interest to investors are that analysts have recently revised their earnings downwards for the upcoming period, which might correlate with the revisions made by DA Davidson. However, it's worth noting that the company is still expected to be profitable this year and has been profitable over the last twelve months. This aligns with DA Davidson's maintained Buy rating, suggesting that the bank's stock may still hold value for investors despite the revised price target and earnings estimates. For those looking to delve deeper into the financial nuances of Southern California Bancorp, there are additional InvestingPro Tips available, which can be explored further at: https://www.investing.com/pro/BCAL. Investors interested in these insights can use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

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